Your Right to Know

A plan to increase school funding, boost jobs and save Ohio’s horse-racing industry through
expanded gambling at seven horse tracks — including one in Columbus — could ride on one overarching
question.

Is an electronic slot machine a lottery game?

Sure it is, a lawyer for the state told a Franklin County judge yesterday.

“The manner in which VLT (video lottery terminal) games are played on the video screen rather
than a paper ticket ... does not change their essential nature as lottery games,” said Assistant
Attorney General Susan Choe.

The lawyer for the Ohio Roundtable, a conservative anti-gambling group that sued to block the
addition of “racinos,” said just the opposite.

Allowing thousands of slot machines is not what voters contemplated in 1973 when they authorized
the state lottery, Thomas Connors said. The constitutional amendment had been put on the ballot by
the legislature.

“They had the chance to accept slot machines ... and they specifically voted against it,”
Connors said of legislators.

Common Pleas Judge Tim Horton is expected to rule before Memorial Day on the lawsuit, which
involves more than the constitutionality of laws authorizing casinos at horse tracks.

Opponents also are challenging deals that Gov. John Kasich struck last year with developers of
four casinos approved by voters in 2009.

Penn National Gaming and Rock Ohio Caesars agreed to pay the state $220 million more in license
fees over 10 years in exchange for the state applying the commercial-activities tax to wagers minus
payouts rather than to total wagers.

Those changes and others — including allowing the Cleveland casino to open in phases in more
than one building — were in memorandums of understanding between the companies and Kasich, and in
legislation he later signed, House Bill 277.

Connors said the changes violate the 2009 constitutional amendment that authorized the
casinos.

But Matthew Fornshell, an attorney for Penn National, said it is not uncommon for lawmakers to
exempt certain receipts from the CAT tax. Not doing so for casinos, he argued, would lead to an “
absurd result” — forcing them to pay taxes when a customer walks in, places a single bet, wins and
cashes out.

Aaron Epstein, an assistant attorney general representing Kasich, urged the judge to dismiss the
suit because the plaintiffs have no standing to sue. He questioned whether there is anything a
court could do to help the opponents, one of whom is a recovering gambling addict.

Even without racinos, Epstein said, the state still will have four casinos (two are to open next
month), lottery games and Internet gambling.

Depending on how the judge rules, his decision could have far-reaching implications for Ohio’s
new gambling landscape.

Only one horse track — Scioto Downs in Columbus — has decided to install Ohio Lottery-run slot
machines regardless of the outcome of the lawsuit. It has a temporary state license but cannot let
customers play the games until it receives a permanent license.

The harness-racing track wants to open the slot machines no later than June, but other tracks
are waiting to see how the suit is resolved — most likely by the Ohio Supreme Court in the end.

Penn National, which plans to move its track in Grove City to the Youngstown area and its track
in Toledo to Dayton to avoid eating into its casino profits, will not open the racinos until 18
months after breaking ground.

In all, the Ohio Roundtable makes 17 claims in the suit, including that the state is letting the
tracks keep too much of the proceeds from slot machines — two-thirds — compared with other lottery
games.

The lottery transferred $739 million to education programs in the most-recent fiscal year. It
could reap hundreds of millions more each year from the racinos.

The state also would net $500 million in license fees from the seven racetracks, plus thousands
of new jobs.